Australian investors should adopt a mindset like business owners and focus on persistent search for sources of growth and profits in times of less favourable economic and political conditions, according to global asset manager, AllianceBernstein (AB).
Investors would also need to take a long-term view which would be less dependent on cycles and trends and learn to reduce the risk arising from the general sense of anxiety which could subsequently lead them to make poor investment decisions.
According to AB, private equity investors were similar to business owners in that they both had a longer time horizon so the investment techniques they used could help them achieve attractive risk-adjusted returns throughout the cycle, independently of broad market trends.
AB said the key differences between business owners and investors focused on a few areas such as:
- Owners would rather concentrate on the real drivers of a company’s value versus investors looking more at financial-market metrics;
- Cash flows as the most important indicator of a company’s business health;
- Long-term outlook which meant that even if a few weeks of volatility could undermine confidence in a stock, a long-term view would make it easier to maintain conviction through uncertain times; and
- Ignoring market benchmarks.
AB’s portfolio manager – global research insight, Tawhid Ali, said: “The key is to stop thinking and acting like an investor, and to think and act like a business owner”.
“Business owners don’t stop searching for persistent sources of growth and profits just because economic or political conditions have become tricky.
“By adopting a similar mindset, we believe that equity investors too can discover opportunities with real staying power.”
According to FE Analytics, AB offers the following funds to Australian investors:
- AllianceBernstein Managed Volatility Equities Fund
- AllianceBernstein Global High Income Fund
- AllianceBernstein Dynamic Global Fixed Income Fund
- AllianceBernstein Concentrated Australian Equities Fund
- AllianceBernstein Global Equities Fund
